There’s a crisis looming for tertiary education (and many graduates)

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When I started my Higher School Certificate (HSC) in Hobart more than four decades ago, my sole goal was attaining the minimum requirement for university entrance.

Although I didn’t know what degree I would enrol in or what career that degree might lead to, I knew one thing very clearly – a university degree provided me with a big advantage in the job market (photo right: a smug University of Tasmania economics student after his 1988 graduation ceremony)

My father had put himself through six years of night school to earn his accounting qualification because he knew his early-career clerical jobs were not taking him anywhere he wanted to go. His hard-won jump up the career ladder, courtesy of tertiary education, had rubbed off on me.

The round of campus interviews conducted midway through each academic year at the University of Tasmania by the big accounting firms, global oil companies, ASX top 50 companies, and assorted multinationals seemed to produce offers for almost every graduate with top-end-of-town career aspirations.

I didn’t know any unemployed graduates, and any graduate who joined an employer below their expectations seemed to have little doubt that they could, in the next year or three, work their way into a better job or an accelerated career path with a more desirable employer.

In the twentieth century and much of the current century, a degree was an unambiguous signal to employers that you possessed intelligence, drive, and resilience.

Last month, the Federal Reserve Bank of New York released a study, The Labor Market for Recent College Graduates, using employment data from up to November 2025, that analysed unemployment and underemployment rates along with early-career and mid-career earnings for 73 different college majors.

The study noted:

Unemployment among recent college graduates stands at 5.6%, substantially lower than the 7.8% rate experienced by young workers without a college degree, but higher than the 3.1% rate for college-educated workers ages 22 to 65 and the 4.2% rate for adults overall.
Computer engineering and computer science appear to be facing new hiring headwinds, supporting the notion that the AI revolution is disrupting the job market.
High employment rates appear to involve a trade-off with relatively low salaries. Several of the highest-employment majors, like some of those in education, were among the lowest fields when it came to early-career wages
Overall, 42% of recent college graduates were classified as underemployed, the highest level since 2020 (the study defined underemployment as “the share of graduates working in jobs that typically do not require a college degree).

The most recent data was more confronting for graduates in the United States: As of February 2026, the national unemployment rate for recent college graduates aged 20-24 was 7.3%, almost two-thirds higher than the national unemployment rate of all workers (4.4%).

Since the 1980s, American college graduates have enjoyed an unemployment rate that was half that of workers with only a high school diploma. In the past five years, that differential has shrunk to only two-thirds.

The trend of major U.S. employers removing a degree as a prerequisite for many jobs previously reserved for graduates has accelerated.

IBM has eliminated degree requirements for 50% of its U.S. positions, Delta Airlines has also removed degree requirements as a precondition for hiring pilots and other positions, Google dropped degree requirements for many technical roles in 2021, having found no correlation between academic credentials and job performance, and last September, Walmart announced plans to remove diploma mandates from hundreds of corporate jobs.

Only 18% of US job postings still list degree requirements, down from over 50% just three years ago.

The reasons would appear to be the recognition that a degree doesn’t predict job performance, the knowledge acquired during a three or four-year degree has a rapidly diminishing shelf life, and that micro courses, such as Google Career Certificates, provide more affordable, accessible and credible further education options for jobseekers across all socioeconomic backgrounds, helping broaden the diversity of talent.

The pessimism about future prospects for graduates, in the U.S. at least, isn’t hard to find.

Last June, The Economist published a piece Why Today’s Graduates are Screwed, concluding that the traditional “university wage premium,” which measures how much more graduates earn, has been shrinking in the US, Britain, and Canada, and that job satisfaction among graduates has also been falling sharply

In Australia, the (less recent) data is slightly less grim: In 2024, among young adults aged 25-34, 1.7% of those with tertiary attainment were unemployed, 7.2% of those who lack an upper secondary qualification and for those with upper secondary or post-secondary non-tertiary attainment, the unemployment rate was 4%.

Industry vendor Adzuna reported that last month, the number of advertised graduate jobs in the UK fell below 10,000 for the first time since they began tracking this metric in April 2016. Universities in the U.K awarded 555,835 undergraduate qualifications in the 2023/24 academic year, a record high.

The trends in both data sets point to the inevitable conclusion that the number of frustrated and angry debt-laden students without the jobs they expected to be offered upon graduating will continue to rise rapidly.

More consequentially, all of these trends are apparent, as we are only just beginning to see how advances in AI are affecting companies’ entry-level hiring volumes.

The Federal Government said the quiet bit out loud this week when Dr. Andrew Leigh, a former professor of economics at ANU and current Assistant Minister for Productivity, Competition, Charities and Treasury, posited that a university degree might become less valuable for securing a job in the age of artificial intelligence.

If the acquisition of an expensive, time-consuming tertiary education does not reliably yield a premium in the job market, then demand for such traditional education will slump.

The data may vary across countries, but it’s hard to escape the conclusion that a crisis is looming in the not-too-distant future.

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Posted in Recruitment